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The Balancing Act: Applying Analytics to Gain a Scale Advantage

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Disruptive technologies – including cloud, mobile and social – are changing how businesses operate and compete. Small companies are leveraging these forces and applying analytics to achieve insights once available only to large enterprises. At the same time, large-scale enterprises are using these forces to shorten product development cycles and speed decision-making as they become more nimble. This "big versus small" flip-flop, where small businesses and large enterprises adopt the most desirable characteristics of one another defines the scale paradox. Does the scale paradox offer an advantage based on company size and the ability to scale, or is it just a new juggling act?

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Use might to exploit disruptive technology.
With a wealth of resources and capital, large enterprises remain in a strategic position to harness the power of disruptive technology and analytics. They are having conversations that move problem-solving away from "big data" to "smart data" and are making the most of this size advantage.
Explore and embrace beyond the limits of size.
The rapid growth of open-source platforms, cloud computing, social media and analytics technologies is diminishing the large-enterprise scale advantage. Small businesses can now operate with new and deeper insights like their larger counterparts at a fraction of the historical cost.
Big bucks for big talent.
When it comes to analytics talent, large enterprises have the capital advantage. Large companies have the financial resources necessary to attract experienced data scientists and statisticians, to provide them the latest tools and technology on the job and to offer training and skills development over time.
Work environment attracts top talent.
While analytical talent remains in short supply with greater demand, small and mid-sized businesses have the workplace advantage. Today’s technology talent – including sought-after data scientists – may prefer a smaller, more flexible work environment where they feel and see the difference their work makes. Many look for companies with the most desirable analytic ecosystem – an environment which today can be company size agnostic. Such talent often thrives on the variety of high value challenges brought to them and the allure of being a "big fish in a small pond".
Think smarter, act faster.
Due to their sheer size, large companies can lack the flexibility and focus needed to use analytics most effectively. If the scale paradox allows smaller organizations to "punch above their weight," it also provides large companies the opportunity to become more nimble, agile enterprises than ever before – advantages which should not be squandered.
Know the customer – even better.
Historically, smaller businesses have been in a better position to know – and thus deliver to – their customers faster than large enterprises. By focusing on data democratization and intuitive technologies, small businesses can obtain a clearer picture of customer wants and needs and respond rapidly in meaningful ways.

My take

us_johnlucker_135x155_081413.jpg us_ryanrenner_135x155_081413.jpg
John Lucker, principal, Human Capital, Global Advanced Analytics & Modeling Market Leader,
Deloitte Consulting LLP
Ryan Renner, principal, Strategy and Operations, Deloitte Consulting LLP


The question is not "what-size" company can benefit most from the scale paradox, but rather how businesses can scale up and down effectively to better innovate and compete by using analytics – and how they can best realize value from the holistic effort.

By creating and leveraging the end-to-end connective tissue for analytic activities, significant return on investment (ROI) can be generated by large and small organizations. Regardless of size, an analytics-based organization needs to plan carefully, manage projects diligently and adopt and adapt flexibly.

Companies in all industries have the opportunity to gain new advantage by using "the best" their size and capabilities have to offer. Such efforts should be coupled with talent enhancements to tip the scale in their favor.

Though large enterprises may have vast pools of data analysts, this doesn’t necessarily mean they are using that talent efficiently. Those who do, often find success in forming smaller groups of analysts focused on targeted business problems. On the other end of the scale, small businesses can now tap into once costly human and data resources through crowdsourcing, social media and cloud computing, allowing them to gain a competitive foothold. Yet such innovative resources come with some issues to consider – intellectual property ownership, data privacy and accessibility and the like – thus a balanced assessment of how best to achieve results based on scale and resources is necessary.

Another critical success factor is to break down analytical strategies into manageable chunks, with short, medium and long-term goals. Short-term initiatives offer the advantage of creating early ROI, thus making the initiative a potential self-funding mechanism. Talent and other resources should be distributed into manageable, bite-size projects with success metrics realized at each stage. Once the first dollar is spent, the fire is lit that carries the initiative forward.

Many large companies tend to try and tackle large-scale problems without considering the small steps needed along the way. Likewise, many small and medium enterprises often lack the resources – both talent and finances – to tackle large-scale issues. Successful companies should adapt and embrace technology regardless of size and address their own issues accordingly. Those who adopt the characteristics of their competitors and break down the analytics initiative into baby-steps may ultimately be the most successful.

Related content

Library: Deloitte Debates
Services: Consulting
Overview: Strategy & Operations; Deloitte Analytics


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